Larger Rise in Stockpiles Than Forecasts Weigh on Oil Prices

Arturo Norris

The accord ended a record global oil glut after more than two years of low crude prices that overstretched many state budgets. Equities markets weakened on Wednesday, while the US dollar.DXY hit a one-month high. It will cut off the global shipments along with OPEC-led oil cuts.

Oil gained as Libya's crude exports from a key terminal were disrupted and Saudi Arabia pledged that global producers will ease their output curbs without shocking the market.

In its supporting budget plan documents, the federal government predicted a drop in oil prices.

There is a significant geopolitical implication for OPEC and the oil producers in the Middle East from the test loading of a VLCC at LOOP.

A powerful 7.5-magnitude natural disaster struck Papua New Guinea's Southern Highlands province early on Monday, the U.S. Geological Survey (USGS) said, prompting oil and gas companies to immediately suspend operations in the energy-rich interior. According to the EIA, the USA will overtake Russian Federation as the world's biggest oil producer by 2019.

"The United States will become the No.1 oil producer sometime very soon", Birol toldReuters, reiterating the IEA's estimate from its latest monthly Oil Market Report published earlier in February. "As a result, the discount on the Canadian effective price vis-à-vis WTI has risen to over US$20 to date in early 2018, more than double its 2017 average (US$9.61)".

Saudi Arabia hopes OPEC and its allies will be able to relax production curbs next year and create a permanent framework to stabilise oil markets after the current supply cut deal ends this year, Falih added. "They (Saudi Arabia) was in agreement on the issue".

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Officials apologized in the retraction for the "erroneous" statement that it said was based on inaccurate information. The Governor said he was in Yobe not only as Governor of Borno but also to represent the Northern Governors Forum.

US production will average 11.2 million bpd in 2019, the EIA said earlier this month. Production in OPEC member Libya has been running at about 1 million bpd, although it remains volatile due to unrest.

Al-Falih's implication that the market could easily go south again is timely given surprising news out of the United Kingdom that for all the talk about aging oil fields, that nation is about to become a net crude oil exporter for the first time in 14 years.

WTI Crude Oil at 62.67 fell from 64 instead of rising to my target at 65, now is may falldown to test 62. Higher U.S. oil exports-including to China and a historic first to the Middle East-are upending the global oil flows and eating away at the market shares of Saudi Arabia and Russian Federation.

But soaring U.S. production is upending global oil markets at a time when other major producers - including the Middle East-dominated OPEC and Russian Federation - have been withholding output to prop up prices.

Saudi Energy Minister Khalid al-Falih said the country's crude production from January to March will be much below output caps.

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"We are studying this market prudently and once we know what the exact scenario is we will come up with an effective solution", Falih said.

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